Informal payments can be defined in many ways -also depending on the context. Possibly one of the broadest definitions for informal payments is also the accepted definition for corruption because the payments are often paid directly to the individual provider. Therefore, it falls under the definition of "public office for private gain". [1]
Informal payments are mostly talked about in regards to the healthcare industry, and Transparency International defines informal payments fairly simply stating that informal payments constitute of charges for services or supplies that are supposed to be free. [2] Another definition has also been suggested saying that informal payments are "payments to individual or institutional providers, in kind or in cash, that are made outside official payment channels or are purchases meant to be covered by the health care system". [3]
In addition to the health care providers, informal payments can be made to public officials. In fact, in some countries it becomes very difficult, if not impossible, to "get things done" without informal payments. This is most commonly seen in services such as customs, taxes, licenses, and regulations among others. [4]
Informal payments in the healthcare industry
Informal payments undermine the quality of health services since doctors may have incentives to provide better care in exchange for a payment, which in turn may render health care services unaffordable to some. Additionally, informal payments undermine the functioning of the healthcare system as a whole since governments may not want to interfere with under-funding of the sector as long as the health care services are operational -thanks to informal payments. Unfortunately, they are still fairly common in many parts of the world -especially in developing and transition countries. Although it may not always be eay to see the difference between voluntary gifts and mandatory payments, the damaging effects of informal payments to the health systems worldwide are still widely accepted. [5]
The general characteristics of informal payments in the healthcare industry include the following:[6] Initiator: either the patient expressing gratitude or the provider requesting a payment Nature: in the form of cash (or a like) or service Moment: before, during or after the healthcare service Recipient: the healthcare institution, medical staff or administration Payer: the patient or his relatives Purpose: expression of gratitude or a fee for service, commodity, access, quicker access or better quality Amount: the monetary value of informal payment by the patient is often comparable to the household's income Views: normal or illegal behavior, corruption, or tradition (cultural aspect) Attitude: negative or positive -usually depending on the moment
The main reason for informal payments is to get quicker access or better quality of healtcare services, and the experssion of gratitude. It is also shown that the socio-economic background of patients does not affect the act of making informal payments. However, they are related to cultural, economic, personal, and governmental factors. For example, in some countries informal payments may be part of the culture. Nonetheless, there has been little research regarding the scope and actual impact of informal payments in high income countries. In Europe, informal payments are mainly practiced in the former-socialist countries and are related to healthcare provisions. Yet, additionally, informal payments are also made to medical staff in hospitals and physicians in policlinics. [7]
Informal payments to public officials
Just as informal payment have negative effects on the healthcare industry, they also harm the business environment when given to public officials. That is because informal payments can distort policymaking, undermine government credibility, and/or divert public resources. [8] The World Bank has listed countries according to the precentage of firms expected to make informal payments to public officials in order to "get things done" when it comes to taxes and customs and so forth. A compiled list of the countries and percentages can be found below: [9]
Country
Percentage
Belarus
13.2%
China
10.7%
Estonia
0.2%
Poland
77.1%
Russia
20.5%
Ukraine
73.2%
Practicing informal payments in Finland
[10] In Finland, the Ministry of Social Affairs and Health is the one responsible for the regulation and guidance of the healthcare system. In 2013, the European Commission made a study on corruption in the healthcare sector in general -as well as by country. From Finland the results were the following:
Please indicate on a scale of 1 (= no problem) to 5 (=very serious problem) to what extent corruption is a serious issue in your country.
Informal payments in medical service delivery 1
Certification and procurement of medical equipment 2
Authorisation and procurement of pharmaceuticals 2
Additionally, 6% of the respondents (whereas the EU average was 30%) agreed that giving and taking bribes, and theabuse of positions of power for personal gain, are widespread among people working in the public health sector.
Although informal payments as such were not seen as a problem by the interviewees, other issues were identified. Conflicts of interest, brotherhood networks and trading in influence were said to be some of the typical forms of corruption in smaller countries like Finland. The main causes for this type of corruption were twofold: (1) the relationships between buyers and sellers of medical equipment and pharmaceuticals are fairly close as the professional circles are small in Finland; and (2) the pharmaceutical companies' leading role in training and educating physicians.
^ Lewis, M. (2010) Informal Payments and the Financing of Health Care in Developing and Transition Countries. International Policy Center, p. 4.
Definition
Table of Contents
Informal payments are mostly talked about in regards to the healthcare industry, and Transparency International defines informal payments fairly simply stating that informal payments constitute of charges for services or supplies that are supposed to be free. [2] Another definition has also been suggested saying that informal payments are "payments to individual or institutional providers, in kind or in cash, that are made outside official payment channels or are purchases meant to be covered by the health care system". [3]
In addition to the health care providers, informal payments can be made to public officials. In fact, in some countries it becomes very difficult, if not impossible, to "get things done" without informal payments. This is most commonly seen in services such as customs, taxes, licenses, and regulations among others. [4]
Informal payments in the healthcare industry
Informal payments undermine the quality of health services since doctors may have incentives to provide better care in exchange for a payment, which in turn may render health care services unaffordable to some. Additionally, informal payments undermine the functioning of the healthcare system as a whole since governments may not want to interfere with under-funding of the sector as long as the health care services are operational -thanks to informal payments. Unfortunately, they are still fairly common in many parts of the world -especially in developing and transition countries. Although it may not always be eay to see the difference between voluntary gifts and mandatory payments, the damaging effects of informal payments to the health systems worldwide are still widely accepted. [5]The general characteristics of informal payments in the healthcare industry include the following:[6]
Initiator: either the patient expressing gratitude or the provider requesting a payment
Nature: in the form of cash (or a like) or service
Moment: before, during or after the healthcare service
Recipient: the healthcare institution, medical staff or administration
Payer: the patient or his relatives
Purpose: expression of gratitude or a fee for service, commodity, access, quicker access or better quality
Amount: the monetary value of informal payment by the patient is often comparable to the household's income
Views: normal or illegal behavior, corruption, or tradition (cultural aspect)
Attitude: negative or positive -usually depending on the moment
The main reason for informal payments is to get quicker access or better quality of healtcare services, and the experssion of gratitude. It is also shown that the socio-economic background of patients does not affect the act of making informal payments. However, they are related to cultural, economic, personal, and governmental factors. For example, in some countries informal payments may be part of the culture. Nonetheless, there has been little research regarding the scope and actual impact of informal payments in high income countries. In Europe, informal payments are mainly practiced in the former-socialist countries and are related to healthcare provisions. Yet, additionally, informal payments are also made to medical staff in hospitals and physicians in policlinics. [7]
Informal payments to public officials
Just as informal payment have negative effects on the healthcare industry, they also harm the business environment when given to public officials. That is because informal payments can distort policymaking, undermine government credibility, and/or divert public resources. [8] The World Bank has listed countries according to the precentage of firms expected to make informal payments to public officials in order to "get things done" when it comes to taxes and customs and so forth. A compiled list of the countries and percentages can be found below: [9]Practicing informal payments in Finland
[10] In Finland, the Ministry of Social Affairs and Health is the one responsible for the regulation and guidance of the healthcare system. In 2013, the European Commission made a study on corruption in the healthcare sector in general -as well as by country. From Finland the results were the following:Please indicate on a scale of 1 (= no problem) to 5 (=very serious problem) to what extent corruption is a serious issue in your country.
Informal payments in medical service delivery 1
Certification and procurement of medical equipment 2
Authorisation and procurement of pharmaceuticals 2
Additionally, 6% of the respondents (whereas the EU average was 30%) agreed that giving and taking bribes, and theabuse of positions of power for personal gain, are widespread among people working in the public health sector.
Although informal payments as such were not seen as a problem by the interviewees, other issues were identified. Conflicts of interest,
brotherhood networks and trading in influence were said to be some of the typical forms of corruption in smaller countries like Finland. The main causes for this type of corruption were twofold: (1) the relationships between buyers and sellers of medical equipment and pharmaceuticals are fairly close as the professional circles are small in Finland; and (2) the pharmaceutical companies' leading role in training and educating physicians.